Any progress is better than none, an assessment that could apply equally to Sanjeev Gupta, his creditors at Credit Suisse and the 3,000 workers at Liberty Steel companies in the UK. Nobody, though, will be under any illusions. Monday’s restructuring announcement represents a sketch of a plan, as opposed to a proposal that can be implemented easily or quickly.
For starters, it’s not obvious who will be interested in buying the aerospace and special alloys steel business in Stocksbridge, South Yorkshire, plus downstream plants at Brinsworth and West Bromwich. Liberty can pitch the operation as “a unique, high quality business serving marquee customers” but demand from the aerospace industry has been clobbered by the pandemic. Any buyer at this point would be taking a hard-to-assess gamble on the pace of recovery in aerospace.
In an ideal world, some of those top-notch customers – the likes of Rolls-Royce and BAE Systems – might be cajoled by government into playing a role in saving a plant that is a key link in a domestic supply chain. Assembling a consortium-led rescue plan, however, tends to be fiddly and time-consuming. And, since the government has been clear that it will not intervene while Gupta is at the helm, ministers’ leverage to encourage others to enter the fray looks limited.
Still, a standstill agreement with Credit Suisse, assuming the “advanced discussions” culminate in a deal, could buy Gupta some time to attempt to refinance the UK operations, which is the critical piece of the jigsaw after the collapse of Greensill Capital in March.
Plan A was a £200m loan from San Francisco-based investor White Oak Global Advisers, but it was pulled after the Serious Fraud Office announced an investigation into the financing of Gupta’s steel business. More time to work on a plan B is helpful – but only if a lender can actually be found.
Elon Musk’s cryptic tweets are saving Tesla a fortune in advertising
No development in the cryptocurrency market would be complete without a tweet from Elon Musk and, sure enough, the chief executive of Tesla was at it again during a wild weekend for bitcoin, which followed last week’s slump and partial recovery.
“The true battle is between fiat [money] & crypto. On balance, I support the latter,” he said, guaranteeing more nuanced analysis of his latest feelings about crypto coins. Put yourself in the shoes of a Tesla’s investor, though. Wouldn’t you appreciate a period of silence from the boss on the subject of crypto at this point?
At any other company, the about-turn on payment would have been regarded as highly embarrassing since the explanation – bitcoin’s “insane” energy use, as Musk put it – was hardly fresh news. Even a mildly robust corporate appraisal should have examined the environmental point before authorisation was given for the Treasury department to spend $1.5bn (£1.05bn) on buying digital coins.
It would probably be futile to try to stop Musk tweeting about whatever he wishes, and his status as commentator-in-chief on all matters crypto ensures he stays in the headlines, saving Tesla a fortune in advertising. Even so, there must come a point when a close association with digital tokens isn’t always a guaranteed win.
One example would be a brutal collapse in prices, meaning heavier falls than seen so far. That moment may never come, of course, but now would seem a good time to get out of the spotlight. Tesla is trying to sell cars. Musk doesn’t have to have a view on every twitch in the crypto market.
Hype is coming to a cinema near you
A bit of hype never goes amiss in the movie business, and here comes Cineworld cranking up the positivity after the re-opening of cinemas in the UK. It said: “This weekend’s performance went beyond our expectations as customers were eager to return to the movies and enjoy the full movie experience.”
Very good – and, actually, not wholly surprising. High streets are busier; there’s no reason why cinemas should be different. But the implication is that Cineworld’s recovery, assuming it continues, will be driven by factors mostly beyond management’s control.
The incentive scheme that could reward brothers Mooky and Israel Greidinger, chief executive and deputy, with £65m if Cineworld’s share price returns to pre-pandemic levels remains an absurd example of giving bosses a huge payday if they simply get lucky.